Dublin-listed commercial property investor Green REIT has unveiled plans to initiate the sale of the company or divest its entire portfolio following the disappointing performance of its share price.
According to a statement from the firm, the decision has been taken due to the persisting 'structural discount in the company’s share price relative to its net asset value per share'.
Irish analyst Goodbody noted that Green REIT is currently trading at an 18% discount to its FY19f forward net asset value (NAV), 'reflecting the stubbornly high discounts that Irish office REITs have been trading at in the last six months, at times making them the cheapest office REITs in Europe'.
Green REIT said that it was still convinced of 'the value of the company’s assets, its management and its business plan, as well as in the Irish commercial real estate sector' but said that this was the best way to maximise value for its shareholders.
Goodbody agreed, saying it expected 'strong demand to be realised for the unique offering that is the Green portfolio'.
Strong portfolio
Green has built a prime portfolio of mostly Dublin office and logistics assets (95% of which is in Dublin), with a portfolio value of €1.48 bn, and a contracted rent roll of €75.5 mln.
Offices make up 88% of the portfolio value at €1.3 bn, logistics make up 7% with a value at 31 December 2018 of €103.6 mln, while mixed-use and a small amount of retail make up the remaining 5% with €63.7 mln of portfolio value.
Significant development opportunity remains within the portfolio, with a particularly attractive 310-acre logistics park at Horizon, located just beside Dublin Airport, according to Goodbody.
'The Dublin office market has continued to see strong levels of interest from global investors with demand particularly strong for long-income streams,' said the analyst. 'Green’s portfolio weighted average unexpired lease term of 8.7 years is almost unrivalled in a European office market context, and this coupled with 96.5% occupancy makes the portfolio a natural fit for a secure income investor.'
The Green REIT board has appointed JP Morgan Cazenove as lead financial adviser to review any potential proposals for the firm, while CBRE has been appointed as property advisor, Davy has been appointed as joint financial adviser and corporate broker, and Arthur Cox has been appointed as the company’s legal advisor.
